Compensation for Administrators PDF

# Compensation for Administrators ## Chapter 1 - Compensation Overview ### Overview Compensation administrators identify the compensation components you create and load as part of your deployment. The compensation administrator continues to maintain the compensation framework. This administrator...

# Compensation for Administrators ## Chapter 1 - Compensation Overview ### Overview Compensation administrators identify the compensation components you create and load as part of your deployment. The compensation administrator continues to maintain the compensation framework. This administrator requires a strong understanding of the design and management of compensation. The compensation framework includes one or more compensation packages, defined grades, different plans, compensation elements, and compensation business processes or tasks. In this chapter, we cover an overview of the compensation framework. ### Objectives By the end of this chapter, you should be able to: - Summarize the compensation framework in Workday. - Compare the compensation partner and compensation administrator security groups. - Identify and explain compensation configuration options in the Edit Tenant Setup - HCM task. ## Workday Touchpoints Kit: Compensation - A unified solution, which means it is important to consider the cross-functional impact of design decisions during deployment, ongoing change management, or the adoption of new products. - The Workday Touchpoints Kit is a full-suite visual display of all data flows and configuration relationships within Workday. Using the Touchpoints Kit, consultants and customers can make informed design decisions, minimize testing, and optimize Workday functionality. - The Touchpoints Kit diagram above shows the relevant product area for this course. ## Compensation Overview - Workday tracks compensation at the enterprise and individual worker level. - The compensation framework consists of grades and plans grouped together in a package. - Compensation grades provide guidance with pay ranges. - Grade profiles allow for localization of pay ranges. - Compensation plans provide various types of pay components. **This image illustrates a compensation package:** | Compensation Package | Eligibility Rules | Plans | Eligibility Rules | |---|---|---|---| | Grades | | Unit Salary, Salary Plan, Period Salary, Hourly Plan, Commission, Allowance Plan | | | Steps | | Merit Plan, Bonus Plan, Stock Plan, Calculated Plan | | | Grade Profiles | | | One-Time Payment, Non-Default Plans | **An illustration of the Compensation Package** - It is common to refer to allowances and time off plans as benefits to the employee. - Common definitions for Workday Compensation and Workday Benefits: | Compensation | Benefits | |---|---| | Financial reward in return for services. | Nonfinancial reward considered a "perk." | | Employee receives cash such as an internet allowance. | Employee does not receive cash such as a pension or healthcare plan. | | Performance-related such as a bonus or merit increase. | Not performance related. | | Regular or ad hoc compensation such as a stock grant or spot bonus. | Regular nonfinancial incentive such as a pension. | ## Compensation and Benefits | Compensation | Benefits | |---|---| | Management negotiates and approves compensation. | Assign, elect, or waive benefits. | | No cost to the employee. | Compulsory benefits are typically free of charge. Optional benefits have a cost to the employee. | **Note:** In Europe, management negotiates and approves benefits that are part of compensation in Workday. ## Benefits And Pay Hub Workday delivers a Benefits and Pay Hub to provide a convenient single location for employees to review and maintain benefits, compensation, and payroll information. The Hub also provides access to useful reports to enable employee self-service. To use the Benefits and Pay Hub, enable and set up the Self-Service: Benefits and Pay Hub and Self-Service: Compensation History security domains to provide employees appropriate access. The configurable hub can also contain announcements, suggested links, and cards with display options that meet your organization's specific needs. ## Compensation Partners and Administrators The compensation partner and compensation administrator security groups typically have a division of responsibilities: | Compensation Partner | Compensation Administrator | |---|---| | View worker HR and events data for workers they support. | View worker HR and events data for all employees. | | View worker compensation data for workers they support. | View worker compensation data for all employees. | | Initiate and view compensation events for workers they support. | Initiate and view compensation events for all employees. | | View contant information for workers they support. | Set up all compensation components such as compensation plans, packages, eligibility rules, and compensation elements. | ## Tenant Setup - Workday Human Capital Management You can find tenant setup configurations for compensation in the Edit Tenant Setup - HCM task. Below is a list of some of the compensation configuration options available in the Edit Tenant Setup - HCM task. | Field | Definition | |---|---| | Enable Compensation Setup Segment Security | This enables you to divide access to compensation setup data among multiple compensation administrators. For example, UK compensation grades should not be visible to compensation administrators in the U.S. | | Hide Total Salary & Allowances | This enables you to hide the Total Salary and Allowances from the worker profile and Related Actions menu. | | Enable Actual End Date | This enables you to enter the date a compensation plan will end for a worker. Enter this date to assign the plan to the worker using the Rollout Compensation Plans to Employees task or a Propose Compensation subprocess. | | Enable Employee Visibility Date | This enables you to select a future date that controls when an employee can view their pay-related compensation events. By making this selection, you have time to inform employees of changes before they can view them in self-service tasks. This functionality is available for the One-Time Payment business process, Propose Compensation Change step of the Change Job business process, and the Request Compensation Change task. This function does not hide any nonrelated pay changes, such as job title. | | Enable Multiple One-Time Payments | This enables you to award multiple one-time payments for a worker as part of one business process. | | Disable Pay Date Help Text for One-Time and Referral Payment Processes | Select this option to disable help-text based on the related payroll payment date under the Effective Date or Scheduled Payment Date fields during one-time and referral payment processes. | | Route Business Processes Based on Costing Overrides | If using worktags, then you can enable this option so Workday will route business process steps to the managers associated with the worktags. Once you enable this option, you cannot disable it. | | Use Calculate 100% FTE for Pay Range Comparisons | This allows comparisons of part-time workers to their full-time equivalents. This function is appropriate if using full-time pay ranges and if you select the Apply FTE% option on the salary plan. The Apply FTE% option has no impact on calculations. | | Compa-ratio Midpoint | Two Options:  - Use Calculated 50% Value: Calculates the compa-ratio based on the midpoint between the min and max. - Use Configured Midpoint Value: Uses a configured midpoint of the range to calculate the compa-ratio. | | Default Frequency | Sets a default value for a compensation component if there is no frequency defined. | | Enable Defaulting Based on Changes to Guidelines | Enables plan assignment defaulting based on guideline changes during compensation changes. | ## Knowledge Check 1. How are compensation components grouped to ensure accurate defaulting? - Mapped using compensation profiles. - Pulled together in a compensation package. - Each supervisory organization has designated compensation component. - Each organization has a unique compensation package. 2. A compensation grade provides: - A pay range reference when entering a salary amount. - A default salary amount. - The levels of salaries. - The salary amount based on performance. 3. True or False? As a compensation partner, you can edit grade ranges. 4. True or False? Compensation eligibility rules are required when creating a compensation plan. 5. The Employee Visibility Date enables you to select which of the following dates: - A future date that controls when an employee can view their business title. - A future date that controls when an employee can view their pay-related compensation events. - A date that controls when a manager can view their employee's pay-related compensation events. - A date that controls when an administrator can view the employee's pay-related compensation events. ## Chapter 2 - Compensation Eligibility Rules ### Overview Compensation eligibility rules are the driving force behind the compensation framework. These rules determine an employee's eligibility during compensation transactions. You commonly define eligibility using a combination of organizations, job profiles, business sites, positions, or class report fields. ### Objectives By the end of this chapter, you will be able to: - Design compensation eligibility rules. - Analyze weak and effective eligibility rules. - Identify where to place eligibility rules. - Test compensation eligibility rules. ## Compensation Eligibility Rules Assign compensation to an employee through an individual compensation transaction or mass event. Whether you complete a transaction or a rollout, you can use compensation eligibility rules to automate the assignment of compensation components. Additionally, compensation can default directly using a position, job management supervisory organization, job requisition, or offer. These eligibility rules target and identify eligible populations. Specifically, rules that allow for variation in salary ranges or plan targets are based on criteria such as a worker’s location or position. When you create compensation eligibility rules, use great consideration and detail. This creation process has three phases: - **Plan:** Eligibility rules determine what compensation components should be available for each employee. - **Actuals:** Staffing events determine which compensation components an employee is actually participating in. Using compensation eligibility rules to default compensation components reduces the risk of data entry errors. - **Payout:** Payroll and Compensation elements determine how compensation pays out. ## Common Rule Criteria There are approximately 50 delivered fields available as criteria for building compensation eligibility rules. You can use selected criteria fields and build “AND” or “OR” logic statements. If you attach two rules to the same compensation component, the system will automatically use “OR” logic between the rules. | And/Or | Source Field or Condition Rule | Relational Operator | Comparison Type | Comparison Value | |---|---|---|---|---| | | External Field or Condition Rule | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | **An illustration of the rule conditions fields that derive the compensation eligibility rule logic.**  - Logic combining conditions - Single field or existing rule - Changes dynamically based on selection - Leave default unless comparing fields - Select eligible or ineligible values Yes/No ## Data Dependency As you configure compensation, ask these important questions: - How does compensation data populate the system? Does it default or do you manually enter it? - Is it a manual process? If so, who is responsible for entering that data? - How is the data used? For example, you can use Pay Rate Type as eligibility criteria for a compensation component. You can link Pay Rate Type to a job profile so it defaults into the employee record when the hiring process completes. If Pay Rate Type does not autopopulate from the job profile, it must be manually entered. If you do not designate Pay Rate Type is a required field, you may miss data entry or enter it incorrectly. If the Pay Rate Type is missing, AND you use it in compensation eligibility rules, then defaulting does not occur. **An example of how you can use the pay rate type populated on a job profile as criteria to auto assign pay groups or use compensation eligibility rules to default.** | | | | |---|---|---| | On Job Profile or Manually Entered | Pay Rate Type | Pay Group Automatic Assignment Rule or Compensation Eligibility Rule | | | | | **Populated on job profile so it defaults during transactions.** | | **Used as criteria to auto assign pay group or uses eligibility rule to default.** | ## Validation rules Validation could ensure that compensation eligibility rules rules on the Initiation or Review Employee Hire step of the Hire business process criteria that default from the job profile are Management Level, Job Family, and Exempt/Non-Exempt. Touchpoint: When you add values, such as new locations or employee types, you must update rules and validations accordingly. ## Using Eligibility Rules in Compensation Additionally, you can use compensation eligibility rules to: - Assign unique compensation targets to different employee populations. - Create exception rules for the compensation review process. - Roll out or remove compensation plans for a target population. - When rolling out a plan, the eligibility rule is based on who should be eligible in the future. The rules for compensation plans and the rollout process can be the same. - When removing a plan, you can use a targeted eligibility rule to only remove the plan for a specific population of employees. Alternately, you can use a rule identifying ALL employees to sweep the population, remove the plan from all employees’ compensation, and allow for inactivation. ## Testing Compensation Eligibility Rules Use the Test Compensation Eligibility Rule task to select a specific instance, such as an employee’s hire event, to run the rule against. If you expect that the employee is eligible for the compensation component the rule is attached to, then the result should be “yes.” The results also display where the rule is currently in use. Use the Employee Compensation Audit report to analyze which employees are: - Eligible and assigned to a compensation component. - Eligible, but not assigned to a compensation component. - Ineligible and assigned to a compensation component. Use the Compensation Rule Assignment report to view the compensation components using the rule. This report also returns a sample population of 50 employees by position that are eligible for these components based on the compensation eligibility rule. ## Performance Considerations After testing and determining that a rule works, review the rule to evaluate its efficiency. There are many factors to keep in mind when creating an optimized eligibility rule:  - Select source fields that have the fewest number of instances. - The order listed is very important. List conditions that exclude the largest number of instances first. Listing general rules first reduces the number of instances evaluated within each condition. - Use filters, subfilters, and related objects in your condition rule. - This allows you to filter out unnecessary data without using calculated fields. ## Eligibility Rule Plan Profile Processing From the Edit Tenant Setup - HCM task, in the Compensation section, select the Enable Eligibility Rule Performance Enhancement for Compensation Plan Profiles checkbox. This opt-in feature enables Workday to review the plan profiles randomly, rather than from top to bottom. The first plan profile that an employee meets the eligibility rule criteria for will default into the compensation-related transaction. Workday no longer evaluates all of the compensation plan profiles making processing more efficient. This feature is useful if your compensation plans have a large number of profiles. Before you enable this feature, review your plan profiles and ensure that the eligibility rules do not target overlapping employee populations. Once you enable this opt-in feature, you are unable to undo the tenant setting. ## Knowledge Check 1. True or False? The primary goal of a compensation eligibility rule is to define an eligible population and allow the system to correctly default compensation components during a staffing event. 2. Which of the following are not commonly used compensation eligibility rule criteria? - Job Profile - Job Family - Job Segments - Organizations - Location 3. What are three examples of how compensation eligibility rules can be used? (Select three correct answers.) - Default compensation plans. - Eligibility for grade profiles. - Initiate business processes. - Roll out and remove plans. - Define compensation partner role. ## Chapter 3 - Default Compensation ### Overview Proper understanding of defaulting behavior and compensation framework is crucial to successfully process compensation transactions. Allowing compensation to default reduces data entry error and allows flexibility for exceptions. There are many options available to configure defaulting behavior. You can use compensation eligibility rules on components, but you can also default from a position, job management supervisory organization, job requisition, or the offer process. ### Objectives By the end of this chapter, you will be able to: - Compare position compensation, requisition compensation, and offer compensation transactions. - Identify the differences of defaulting behavior during a hire and a job change. - Summarize the importance of order precedence between the different compensation defaulting methods. ## Defaulting Compensation For compensation components to accurately default, you must assign eligibility rules to the compensation package, compensation grades, grade profiles, and all plans within the compensation package. The rules on a compensation package can be different from the rules on plans and grades within the package. **An illustration of how compensation eligibility rules map to a compensation package and a plan.** | | | |---|---| | Compensation Package | Compensation Eligibility Rule | | Compensation Plan | Compensation Eligibility Rule | Defaulting provides guidance to the partner or manager completing the transaction Typically, when managers enter compensation data they can only select eligible compensation components for employees. However, you can configure security to allow compensation partners and administrators to override default compensation. Based on the configuration, several behaviors can occur during a staffing event: - If a worker is eligible for a package, and eligible for a plan in the package, defaulting occurs. - If a worker is eligible for a plan that is NOT in a compensation package, defaulting does not occur, but the plan is available to select. - If a worker is NOT eligible for a plan, even though the plan is in the compensation package, defaulting does NOT occur. - If a worker is eligible for more than one compensation package or compensation grade, these components and plans do NOT default. The package, grade, and plans are available to select, but do not default. **Note:** There participation in a plan. For you may not receive or in a plan a difference between compensation component eligibility and example, you can be eligible for a cell phone allowance, in the plan. Having compensation components default as part of a staffing activity reduces data entry errors and maintains flexibility for exceptions. When completing compensation staffing transactions, the following criteria often defaults: - Package - Grade and grade profile - Salary and hourly plans - Allowance plans - Stock, merit, and bonus plans Compensation can default using the following methods: - Eligibility rules - Grades on job profiles - Default compensation on position - Default compensation on job requisition - Default compensation on offer ## Associating Compensation Grades with Job Profiles There are two methods to default the compensation grade. 1. First, the compensation grade can default using the eligibility rule framework. 2. Second, you can attach the compensation grade directly to a job profile. Administrators commonly attach the grade to the job profile to ensure eligibility for all employees in a compensation grade. Your organization may require more criteria to accurately define which employees are eligible for a compensation grade. If so, defining the compensation eligibility rules framework is the better option. If you use the eligibility rule framework, leave the Compensation Grade Profile field blank on the job profile. This configuration allows eligibility rules to determine which grade profile populates for an employee during a compensation event. This approach is common if you base job profile eligibility on location-related data, where you can only select one grade profile. ## Defaulting from Position Compensation In addition to eligibility rules you can define default compensation on a position. Both methods have the same goal, which is to accurately populate compensation during a staffing transaction. If you set up compensation eligibility rules, and you use default compensation from position, then you get the advantage of both defaulting methods. **Important:** If you use both compensation eligibility rules and default compensation from a position, the default compensation from position overrides the eligibility rules. When entering the default compensation on a position, the compensation eligibility rules populate the compensation components. You then have an opportunity to edit this information. When using default position compensation, a default salary plan requires you to enter an amount, currency, and frequency. Common reasons to use position compensation include: - Provide guidance to users, such as a manager or partner, entering compensation data. - Use position budgets. - Track actual compensation and compare to budget. This tracking method allows you to use default compensation as budgeted and approved by management. First, identify all compensation components and define actual salary amounts, then you can create reports to compare this information. - Send target or approved compensation to an external applicant tracking system. - If you use the staffing model of: - Position Management, you can assign position compensation directly to an unfilled position. - Job Management, the default compensation populates for anyone hired into the supervisory organization. Since the system only creates positions during the hire, no reporting is available for unfilled positions. You need to assign position compensation for each position created using the Change Default Compensation business process. This standalone business process helps you assign or change default compensation to a position. To initiate the Change Default Compensation business process, use the unfilled or filled position’s Related Actions, and navigate to Compensation > Request Default Compensation Change. The Change Default Compensation appears as Request Default Compensation for Position Event when viewing it within the overall process. You can also use the Change Default Compensation business process as a subprocess in the following business processes: - Create Position, Edit Position, and Edit Position Restrictions processes. - Set Hiring Restrictions and Edit Hiring Restrictions processes. - Termination process. ## Position Compensation Defaulting - What Happens? If you use position compensation with compensation eligibility rules, here is what you can expect: - **Compensation Eligibility Rule Framework:** Defaults compensation during staffing or compensation events. - **Job Profile:** If you link a job profile to a compensation grade, it overrides the compensation rule. - **Position Compensation:** Compensation eligibility rules and the job profile encompassing the compensation grade populates position compensation. Then the position compensation populates the compensation staffing events. **The following table details defaulting behavior during staffing transactions:** | | Position Compensation | During Staffing Transactions | |---|---|---| | Using Eligibility Rules and Using Job Profiles | | | | Eligibility Rule - Yes, Job Profile - No | No position compensation. | All components default using eligibility rules. | | Eligibility Rule - Yes, Job Profile - Yes | No position compensation. | Most components default using eligibility rules: - You enter the salary amount. - The grade defaults from the job profile. - You enter the salary amount. | | Eligibility Rule - Yes, Job Profile - No | All components default into position compensation using eligibility rules. - You enter the salary amount. | All components default from the position: - The salary amount defaults from the position. - The salary amount is editable. | | Eligibility Rule - Yes, Job Profile - Yes | Most components default using eligibility rules: - The grade defaults from the job profile. - You enter the salary amount. | All components default from the position: - The salary amount defaults from the position. - The salary amount is editable. | **Note:** Workday requisition compensation. time if you populate it with the requisition compensation. ## Compensation and Job Requisitions You can create job requisitions with or without requisition compensation. The system assigns requisition compensation for each open requisition created with the Requisition Compensation business process. This business process helps you assign or change default compensation on a job requisition. You can use it as a standalone process or a subprocess in the Job Requisition or Job Requisition Change business processes. - To initiate the standalone Requisition Compensation business process, use the open requisition’s Related Actions, and select Compensation > Request Default Compensation Change. - The Requisition Compensation subprocess is referred to as Request Requisition Compensation when viewing it within the parent process. The person responsible for assigning this default compensation should be familiar with your organization’s policies and compensation. ## Defaulting from Job Requisition Compensation The option of defining requisition compensation is similar to position compensation. If you use the Request Requisition Compensation subprocess, the compensation components default into the job requisition and are editable. One difference is that when using job requisition compensation, there is more required data to enter. This data provides more information for the eligibility rules to reference and more accurate defaulting. In contrast, when creating a position, only job family, job profile, location, time type, worker type, and worker subtype can populate. These fields are all optional. If left blank, the eligibility rules may not have enough data to evaluate. In this case, defaulting does not occur and position compensation requires manual entry. To take advantage of both the position and requisition defaulting methods, set up compensation eligibility rules and also default compensation on the position. When entering the default compensation on a position, the compensation eligibility rules populate the compensation components and then you have an opportunity to edit this information. **Note:** If you use compensation eligibility rules and position compensation, the default compensation from the position overrides the eligibility rules when you enter requisition compensation. ## Requisition Compensation Defaulting - What Happens? You can use requisition compensation with compensation eligibility rules or position compensation. If you use this method, you can expect the following behavior: | | Position | Job Requisition | Staffing Transaction | |---|---|---|---| | Eligibility Rules and Job Profile | | | | | Eligibility Rules - Yes, Job Profile - Yes | No position compensation. | Most components default using eligibility rules: - Grade may default from job profile. - Enter salary plan and amount. - Edit compensation as needed. | All components default from job requisition: - Salary amount defaults from requisition. - Edit comp as needed. - Auto complete without review. | | Eligibility Rules - Yes, Job Profile - Yes | Most components default using grade eligibility rules: - Grade may default from job profile. - Enter salary amount. | No requisition compensation. | All components default from position: - Salary amount defaults from position. - Edit compensation as needed. | | Eligibility Rules - Yes, Job Profile - Yes | Most components default using eligibility rules: - Grade may default from job profile. - Enter salary amount. | All components default from position: - Salary amount defaults from position. - Edit as needed. | All components default from job requisition: - Salary amount defaults from requisition. - Edit as needed. | **Note:** Workday does not recommend you use position compensation and requisition compensation. Assigned compensation is easier to maintain over time if you populate it with the requisition compensation. ## Defaulting from Offer Compensation (Requires Workday Recruiting) Configuring offer compensation is a complex process. Approved offer compensation overrides eligibility rules, position compensation, and requisition compensation. Ideally, the pre-hire agrees to the offer compensation, which then automatically populates during the hire process. If you include the Propose Compensation Offer/Employment Agreement subprocess in the overall Offer or Hire business process, then the compensation components default and are editable. For offer compensation, you can use the compensation eligibility rules framework and default compensation from a job requisition. This configuration provides you with the advantage of both defaulting methods to account for more unique scenarios. When entering default compensation on a job requisition, you can use either the compensation eligibility rules or the default position compensation. **Note:** Offer compensation defaulting takes precedent over position compensation. If there is no requisition compensation, this process uses compensation eligibility rules to default compensation components. ## Autocomplete Compensation with Offer/Employment Agreement It may be unnecessary to enter or edit compensation that has been agreed upon. There is an option to autocomplete compensation during the Propose Compensation Hire and the Propose Compensation Change process. ## Offer Compensation Defaulting - What Happens? If you use offer compensation with compensation, the following compensation eligibility rules, position compensation, or requisition behavior will occur. | | Position | Job Requisition | Offer | Hire | |---|---|---|---|---| | | | | | | | No position compensation. | Most components default using eligibility rules: - Grade may default from job profile. | All components defaulted from job requisition and are editable. | All components default from offer and are editable. | | | Most components default using eligibility rules: - Grade may default from job profile. - Enter salary plan and amount. - Edit comp as needed. | All components default from position: - Salary amount defaults from position. - Edit as needed. | All components default from offer: - Salary amount defaults from offer. - Edit as needed. | All components default from offer: - Salary amount defaults from requisition. - Edit as needed | ## Order of Precedence In addition to defaulting configuration means: behavior, compensation - Employees are eligible for only one - Employees are eligible for only one - Any plans that should default - Any plans that should be selectable should be outside of a package. of precedence. Correct compensation package. compensation grade, and one compensation grade profile within the grade. need to be in a package. for a specific group of employees, but not default, If you are using compensation eligibility rules and decide to set up an alternative method, the following default behaviors will occur. | Defaulting Method | Result during Hire | |---|---| | Compensation Eligibility Rule | All compensation components will default using compensation eligibility rules. | | Position Compensation | Eligibility rules default compensation components into the position compensation. During hire, compensation defaults from the position. | | Requisition Compensation | If position compensation exists, it will default into requisition compensation. If there is no position compensation eligibility rules will default compensation components. During hire, compensation defaults from the requisition. | | Offer Compensation | If requisition compensation exists, it will default into the offer compensation. If there is no requisition compensation, eligibility rules will default compensation components. Position compensation takes no action. During hire, all plans and salary amounts are editable. | ## Knowledge Check 1. Which is false statement? - A salary amount is required in position compensation when a salary plan is entered. - Offer compensation defaulting overrides position compensation defaulting. - Compensation eligibility rules are used with plan profiles to localize target amounts. - It is recommended you use compensation eligibility rules, position compensation, requisition compensation, and offer compensation in combination. 2. True or False? If using job requisitions, the request compensation change step is required. ## Chapter 4 - Compensation Basis ### Overview How do you calculate compensation? Do you define it the same way across your entire population or does it vary? In this chapter, we will explain the details of compensation basis. Compensation basis allows you to create different definitions of estimated earnings for multiple populations across a country and the globe. Specifically, we will introduce you to the *Manage by Basis Total* (*MBT*) function. *MBT* provides the option to manage an employee’s compensation based on a top-down algorithm to distribute pay. ### Objectives By the end of this chapter, you will be able to: - Define compensation basis and map usage in reports and analytics. - Administer compensation basis. - Describe the Manage by Basis Total (*MBT*) compensation basis. - Configure an *MBT* compensation basis. ## Compensation Basis Overview The compensation basis feature allows you to define a unique estimation to use as: - The basis for bonus, stock, allowances, and period salary - The amount for merit increases. You can also use compensation basis to view on reports. There are three compensation bases that Workday delivers: | Action | Definition | |---|---| | Total Base Pay | The sum of any compensation components using the Base Pay Elements field of the employee’s compensation grade or compensation grade profile. | | Total Salary and Allowances | The sum of all the salary and allowance plans on a position. | | Eligible Earnings Override | A field enables you to define a currency amount used for bonus calculations and percent-based stock plans. You can use an inbound | ## Configurable Compensation Basis There are four steps to creating and managing compensation basis in Workday: 1. Access the Create Configurable Compensation Basis task. 2. Select compensation plans to include in the compensation basis. 3. Adjust the compensation basis on the Maintain Compensation Basis page. Evaluate the rankings in relationship to other compensation bases. 4. Run the Employees Missing a Compensation Basis report to determine if there are employees without an eligible compensation basis. You can easily edit a compensation basis from the Maintain Compensation Basis page. The fields you can change include: Name, Eligibility Rule, Functional Area, Use to View Compensation, and Ranking. In addition, you can delete a compensation basis. **Maintain Compensation Basis task** When configuring a compensation basis, the following compensation plans are available: - Salary Plans - Period Salary Plans - Allowance Plans - Bonus Plans - Retirement Savings Plans - Commission Plans - Calculated Plans - Future Payment Plans The following fields are available when configuring a compensation basis: | Action | Definition | |---|---| | Eligibility Rule | There are a few configuration options: - If left blank, all employees can use this definition. - If an employee is eligible for more than one definition, then you would need to rank the definitions. The one with the highest ranking will display for that employee in reports, such as the Compensation Basis Analytics report. | | Functional Area | There are four functional areas to choose from: - Compensation - Benefits - Projects and Work - Planning | | Use to View Compensation | Select this checkbox if using this basis in reports and analytics. If a compensation basis has a specific purpose, such as calculating a percent-based bonus, clear this box. | | Ranking | Employees may be eligible for more than one compensation basis, but only the highest-ranked basis is the employee's primary basis. | | Salary Plans Maximum | Enter a maximum percentage amount for salary plan allocation. You cannot enter a value greater than 100. For example, if you enter 80%, then the amount allocated to salary plans cannot be greater than 80% of the employee’s total compensation basis. You must disperse the remaining 20% between plans—allowing override, such as allowance, bonus, and commission plans. | | Retain Basis Total | Workday retains the compensation basis total even when a staffing transaction changes compensation plan assignment. Workday will recalculate the plan assignments but the compensation basis total will be fixed. | | Compensation Plan Option | All: Includes all compensation plans of one type.  - Base Pay Only: Includes all compensation plans of one type only if the compensation element selected. - Select Plans: Includes only specific compensation plans of one type. - None of the Above: Excludes the plan type from the calculation. | ## Configurable Compensation Basis Examples - On Target Earnings Example - Who is eligible? *Sales employee in U.S.* - What does it include? *Salary Plan + Cell Phone Allowance + All Commissions* - Cost to Company Example?  - Who is eligible? *Employee in India* - What does it include? *Salary Plan + All Bonuses + All Allowances + Pension* - Total Cash Example? - Who is eligible? *Employee in UK* - What does it include? *Salary Plan + All Bonuses + All Allowance* ## Compensation Grades and the Compensation Basis In addition to total base pay, you can set up *unique pay ranges* for each compensation basis. The unique pay ranges provide more insight when initiating a compensation change. Only two compensation bases will display for an employee: 1. Total Base Pay 2. The highest-ranked basis for which the employee is eligible. ## Manage Compensation Basis Workday provides the option to manage an employee’s compensation using their compensation basis. One common basis is *Manage Basis Total* or *MBT*. If you hire an employee using an *MBT* basis, you will enter one total compensation amount. The amount distributes automatically to all the components of pay within the compensation basis using an algorithm. For an employee with multiple plans, the increase or decrease applies to all assigned compensation plans. ## Retirement Savings and Compensation Basis Use retirement savings plans to show an employer contribution percentage requires an additional step. The savings plan maps to the correct compensation basis to identify the designated percent. This uses the *Map Retirement Savings Plans to Compensation Basis* task. If you use a percentage of the salary plan to calculate an employer contribution amount, define salary in payroll for your retirement savings plans. This mapping only controls how salary is defined on the compensation basis. ## Knowledge Check 1. What are the three Workday delivered compensation bases? (Select three correct answers.) - Total Base Pay - Total Salary & Allowances - Eligible Earnings Override - Total Rewards 2. Which of the three delivered compensation bases can be loaded using EIB? - Total Base Pay - Total Salary & Allowances - Eligible Earnings Override - Manage Basis Total 3. True or False? Total Base Pay can include allowance plans. 4. True or False? If an employee is eligible for more than one compensation basis, the highest ranked will be their primary compensation basis. ## Chapter 5 - Compensation Elements and Grades ### Overview Compensation elements are a bridge between compensation and payroll. When a compensation element is attached to a plan and an employee is participating in the plan, then payroll earnings can drive employee pay. Grades define the standard compensation range for a job or job level. Grade profiles allow you to establish localization for grades, eliminating the need to set up multiple grades to account for geographic or currency differences. Workday requires grades, but grade profiles are optional. ### Objectives By the end of this chapter, you will be able to: - Explain compensation elements and compensation element groups. - Identify the compensation components that use compensation elements. - Demonstrate how to configure compensation grades, grade profiles, and grade steps. ## Compensation Elements and Element Groups ### Compensation Elements The compensation administrator is responsible for mapping and maintaining the compensation elements and element groups. Depending on the type of compensation plan, you may need to create a unique compensation element for each plan. For example, bonus plans may share the same earnings element, but an allowance may be different from one allowance plan profile plan to another. **An example of the Maintain Compensation Elements task.** In payroll,